Mike MilliganFounder and CEO, 1.oak Financial · Founder and CEO, 1.oak Financial

A Financial Talk With My Grandma (With What I Know Now)

8 Apr 2026 · 1 min

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In this brief monologue, Mike Milligan explains to his (hypothetical) grandmother that a nominal bank interest rate of 3.5% is largely eroded by inflation—estimated at 2.4%—and by taxes on the interest earned. After accounting for both, the real, after‑tax return is effectively zero, meaning the savings are not truly growing. He stresses that unless savings outpace both inflation and tax liabilities, the hard‑earned money will lose purchasing power over time, which he deems unacceptable.

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Now here's the math, Granny, if I was talking to her. If your money is earning 3.5% at the bank, inflation is eating away at that money, at that interest, at, at least 2.4%. So you're really only gaining about 1.1%. There's something else eating away at that money market too, and it's called taxes. The real return is not 3.5%, it's really like 0. So if your savings aren't beating inflation and covering the tax bill by a meaningful margin, you're not growing your money. You're slowly losing ground. And that to me is not acceptable for the hard-earned money that my granny earned, but also you have earned over your life.